Around a third of firms trading over-the-counter derivatives will direct more business to exchange-traded futures markets as traders get to grips with changes to the swap market, according to a UBS survey.

In the bank’s fourth annual survey of participants in the OTC derivatives markets, 29% of respondents said they had already or were likely to direct swaps business towards the variety of similar products listed on CME Group, IntercontinentalExchange’s Liffe or Eurex.

Furthermore, 84% expected that up to 30% of their OTC derivatives trading could be done via such products in the future. Around 40% of respondents thought it was too early to tell whether such a switch would occur, which UBS said was due to market participants not having enough time to assess alternatives.

Alex Kramm, analyst at UBS and one of the authors of the report, said: “Over the last year many people have been preparing to comply with the new rules, which probably accounts for the level of uncertainty in the survey. But now, more firms are ready and are switching their focus to improving the efficiency of their OTC derivatives trading and this is when the switch to futures could occur."

Meanwhile, new Futures Industry Association figures show that the number of futures and options traded on global exchanges rose 2.1% to 21.64 billion contracts in 2013. While the levels remain well below those seen in 2011 and 2010, North America showed growth.

Volumes in North America rose by 10%, led by gains at the CME Group and IntercontinentialExchange. North American exchanges accounted for 36.7% of the global exchange-traded derivatives market in 2013 — up from 33.6% in 2012 — leapfrogging Asia to represent the largest region in the world for futures trading. Asia-Pacific’s share fell from 35.6% in 2012 to 33.7% last year.

Volumes in Asia, Europe and Latin America were all down on previous years.

By asset class, interest rates, energy, and the metals sector all benefited from double digit increases in volume. The equity index sector declined by 11.2%, primarily due to a decline in the trading of Korea’s Kospi 200 index options, according to the FIA.

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The increased volumes in futures and options trading on exchanges follows G20-led reforms to the swaps markets that will raise the cost of trading and promote on-exchange trading.

The new regulations, which are in the process of being implemented across the globe, require clearing houses to stand in the middle of a swap trade and collect collateral in order to minimise the risks of a counterparty default.

Swaps require more collateral to be held against them than futures and 38% of respondents to the UBS survey said this was the primary driver of the switch to futures. Other drivers included lower execution costs (28%), better liquidity (21%) and broader access (7%).

According to the UBS study: “Given the likelihood for higher participation costs and uncertainty about future liquidity in OTC derivatives market, we are not surprised to see market participants considering substitutes to OTC markets. In fact, we believe increasing buyside education by exchanges, FCMs [futures commission merchants], and industry consultants has driven a much higher awareness of the increasing costs to transact in OTC markets and the opportunities to find substitutes in futures markets.”

One product that is gaining traction in the US as an alternative to OTC derivatives is swap futures, contracts that replicate an OTC derivative through a standardised exchange-traded future.

CME Group and Eris Exchange are among the US exchanges that have launched swap futures for interest rates, while Ice offers a credit default swap future.

Half of those questioned by UBS said they planned to make more use of the CME swap future, which traded a record average of 12,000 contracts per day last December.

However the survey adds that the rules governing collateral in Europe are not finalised. This means that the collateral required against a swap could be similar to a future, negating the cost savings gained from replacing an OTC derivative exposure with a swap future.

Final European rules on collateral are expected in the third quarter of this year.